Sunday, October 24, 2010

40% of salary of Central government employees based on performance, Dr. Trivedi

Central Government has introduced accountability across the board with setting up performance targets and top level officers agreeing that upto 40 per cent of their salaries will be placed with in two months, dependent upon level of performance for which self-evaluation process has been evolved, Dr. Prajapati Trivedi, Secretary, Performance Management Division, Cabinet Secretariat revealed here today.

Stating that the system change in the central government would enable measurable response to public grievance by government officials, Dr. Trivedi declared.

Inaugurating ASSOCHAM organized 2nd CFOs Roundtable Conference 2010 here today, Dr Trivedi also indicated that all 62 government ministries and departments on board have signed the tool called Results Framework Document (RFD) which will set targets for each ministry and will finally be the basis for yearly evaluation. “Results will be our bottom-line just like profits are the bottom-line of the private sector” he pointed out.

The formula of assessing the government employees as proposed by performance management division under the cabinet secretariat, has ruled out “not me syndrome and passing the buck”. The Secretaries in turn will have to set performance levels for the officers below them and evaluation would be from bottom to top. “once we fix the performance deficit, other things will follow” Dr. Trivedi said elaborating on the causes of performance deficit. He told the audience that had leading private sector CFOs that “private sector will look up to us”.

The Cabinet Secretariat also said that the first round of assessment, initially for three months from January to March 2010, there is a strong possibility that a large number of government employees would receive an extra pay once the new formula is adopted.

He also mentioned that the government is extending the performance monitoring and evaluation system to 62 departments from the current fiscal. According to our system, a department sets a target, fixes the weightages of each target, and if it succeeds meeting all its targets, gets a score of 100.

He also highlighted that many countries such as Canada, New Zealand, Australia, Netherlands, Denmark, UK, US and Finland have moved away from the traditional government administrative model to a management model under which officers act like corporate managers as they get greater operational freedom, but are held accountable for results. In fact, New Zealand is considered to be the leader of the pack where performance of government agencies are weighed in by setting targets and adopting regular evaluations. “In New Zealand the Governor of the central bank has his salary linked to inflation level being low and as a result for the last 18 years that country had a low inflation level,” he disclosed.

The various ministries and departments are preparing their Result Framework Documents (RFD) which is to be submitted to this division and the performance of the ministries will be monitored based on these documents only. First, the ministries are themselves setting their targets and secondly they have huge manpower ranging from senior bureaucrats to employees under central secretariat scheme (CSS).

The government has already established a performance management division within the cabinet secretariat headed by a professional.

So, the performance of central ministries is under close watch. By introducing performance-linked payouts, the Indian government is finally going the corporate way which may force central government employees to deliver their best.

Speaking on the occasion, Mr. Y M Deosthalee, CFO, Larsen & Turbo ltd. said that to improve the competition by reducing the cost, competitive analysis in a qualitative manner and by communication.

Mr. S C Agarwal, CMD, SMC also said that compliance with all the stakeholders in the Indian capital markets have to meet the highest standards of corporate governance, not only in letter of law but in the spirit of the law as well.

He further said that the multiple modes of fund raising present in the Market today present another set of challenge s to the CFO of today’s corporations. The importance of having continuous updates about the latest trends in the various instruments of primary market such as IPO’s, FPOs, QIPs, ADRs, GDRs, FCCBs etc cannot be ignored. Many of the company’s that choose to ignore thses instruments of fund raising will only be giving up their chances of entering the next orbit of growth.